Tips for small & medium sized enterprises.

Business & Money

“It’s not how much money you make, but how much you keep, how hard it works for you, and how many generations you keep it for.” Robert Kiyosaki

Money problems are reported to be the biggest challenge for SMEs.

Oftentimes, however, small and medium sized businesses suffer not because they’re unable to make money. Money management is where the problem lies.

This post is not so much about how to get revenue. On this note, we’ll quote Jim Rohn who said: “If you really want to do something, you’ll find a way. If you don’t, you’ll find an excuse.” For the purpose of this article, let’s assume that we’ve got that covered. Great, so what’s next?

Do your numbers look good on the balance sheet? They do? Nice!What about those easily accessible cash reserves though? Are they sufficient? If not, consider direct and indirect effects of not having enough cash:

Manage your clients’ credit schemes – some wait too long allowing clients to get into too much debt which puts pressure on the business.

Collect deposits or get paid upfront before ordering stock or doing the work, especially if it’s a new client. You should not be left without if they change their mind.

Manage your own Credit and debt

We’ve seen too many business owners ignoring debt collectors banging on their doors.

Ignoring the bailiffs won’t send them away

One must find a way to pay…

Don’t spend an assumed future income either. What if the money you’ve already spent (in your head) isn’t paid on time, or at all? Don’t spend the money you don’t have just YET. Wait until you physically have it, and then spend if it’s helpful…, which takes us to…

Careless & extravagant spending

“If you buy things you do not need, soon you will have to sell things you need.” Warren Buffet

Question whether you really need to drive this amazing, but expensive company car. Yes, it looks good and may impress prospects. However, don’t buy unnecessary stuff until you can truly afford it, at least. Live below your means – not to the limits. Protect the profit you make – keep it in cash reserves, reinvest in your business or in yourself first (more about investing later). Have a vision for your money because that car company trying to lure you in certainly does!

Finally… Know the state of your finances

Take responsibility for your financial future.

Do you have a bookkeeper? Fantastic! Yet, don’t rely on your accountant only. Keep an eye on things. Your money or lack thereof is your responsibility.

These are simple, but powerful tips which help organisations remain financially free. This article is not exhaustive, and there’s so much left to be said about Business & Money, hence there will be part 3 in which we’ll continue discussing just that.

In the meantime, we hope this post is helpful. Please leave a comment and let us know if it is.